dtac 30 November 2016

Transcription

1 dtac 30 November 2016

2 Agenda Topic by dtac overview Regulatory update Network Financial performance CEO CFO CTO CFO Break Market updates Tapad pilot CMO Head of customer value management Retail shops visit 2

3 OVERVIEW Lars-Ake Norling Chief Executive Officer, dtac

4 Bright prospect for Thai telcos Country Large population Well-placed in AEC Urbanization Economy Resilient economy Rising of middle class Increase efficiency/ productivity Industry 3-player market Low fixed broadband penetration More room for growth of smartphone penetration Consumer Data-centric consumer Social media enthusiasts Heavy usage of streaming services 4

5 dtac: 2 nd largest mobile operator Subscribers 24.8m subscribers (Q316) Revenues THB 84.3 bn total revenues (12-m period ended Q316) Revenue Market Share 27% service revenue ex. IC (12-m period ended 30 Sep 16) Network Coverage 94% pop coverage 46k 3G and 4G sites (Q316) Frequency Bandwidth 50MHz total bandwidth in use (Q316) 850MHz band concession 10MHz 1800MHz band concession 25MHz 2100MHz band license 15MHz Market Capitalisation THB xx bn as of 29 Nov 16 5

6 dtac has turned around a long-term negative trend Service Revenue (ex.ic) and EBITDA YoY Growth (%) Service revenue ex IC EBITDA Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216* Q316 6 Note: *Revenue growth for Q2 16 is normalized to exclude a one-off adjustment of THB164mn in prepaid revenue

7 Strategic direction No. 1 digital brand vision goal Empower society by connecting people to information, content and services that matter to them, helping to improve their lives, and securing a better future for all To be the no.1 digital brand in Thailand, by being our customers favorite partner in digital life digital disruptor 7

8 dtac has strong spectrum portfolio Concession 1/ License 2/ 850MHz 1800MHz 2100MHz Total 2G 5MHz 5MHz 3G 10MHz 10MHz 20MHz 4G 20MHz 5MHz 25MHz Total 10MHz 25MHz 15MHz 50MHz 1/ concession expires in 2018, excluding 20MHz of unused 1800MHz band. 2/ license expires in spectrum not a short-term concern work with authority for a clear spectrum roadmap: 2.6GHz, 2.3GHz, 1800MHz, 850MHz, etc. dtac has every intent to obtain additional spectrum in future auctions 8

9 Network & spectrum investment to secure data position Current spectrum portfolio is on par with the competitors Focus areas Spectrum JV with CAT Network densification Optimize where data users are Network perception MHz (License expiry) AIS dtac TM (2030) (2033) (2027) (2025) (2018) (2018) (2027) (2025) (2030) (2033) (2027) 55.0 MHz 50.0 MHz 55.0 MHz Spectrum release timeline MHz (2x45 MHz) Hertz/subscriber MHz (2x45 MHz) 850MHz (2x10 MHz) 2600MHz (partially re-farmed from MCOT s 2x70) 2300MHz (1x60MHz) Source: *Interviews by Secretary General of the National Broadcasting and Telecommunications Commission 9

10 Channel expansion to better serve customers retail shop network 55 additional branded shops in Q316 dinfinite flagship store launched digital transformation of retail shop digital channel dtac official store on Lazada dtac online store personalized offers via dtac app and SMS 10

11 Leading on-line position to drive sales and lower cost Tapad My Menu Real time/personalized offers to all customers in Thailand Double click through rate Real time/personalized offer engine in dtac app Best offers and payment solution 11

12 Digitize journey to improve efficiency and lower cost dtac app Retailer app Leading operator app in Thailand Best self service and offer engine Digitize all retailer transactions Simple app for refill, topping, MNP, and SIM registration 12

13 Continuous improvement in costs % regulatory cost % regulatory cost % of service revenues Concession License 30% 5.25% % of service revenues ex. IC 18.8% 18.7% 17.4% 17.7% 15.3% 15.6% Q215 Q315 Q415 Q116 Q216 Q316 CoS excluding regulatory % of service revenues ex. IC 15.1% 15.3% 14.6% 14.4% 13.9% 13.7% Q215 Q315 Q415 Q116 Q216 Q316 Declining trend of regulatory cost Network OPEX under control despite massive expansion of 3G and 4G network Ongoing implementation of OE programs 13

14 dtac offers engaging digital services attractive and relevant digital services for customers dtac app VoLTE, VoWiFi Capture cloud storage Music Infinite plan to launch new services regularly 14

15 Key focus areas network digitize core prepaid turnaround postpaid growth 15

16 REGULATORY UPDATE Sverre Pedersen Chief Financial Officer, dtac

17 Summary of current situation Concession frequency (850 & 1800MHz) Licensed frequency (2.1GHz) Ownership of assets belong to CAT Revenue share 30% Right to use concession spectrum dtac is obliged to transfer the mobile network used for concession spectrum to CAT by end of concession license fee 5.25% Right to use licensed spectrum Build telco assets under BTO agreement Concession assets (e.g. towers, core, transmission) Lease concession assets from dtac (e.g. transmission, towers) DTN 17

18 Strengthen relationships with CAT & TOT Who are they Key issues dtac position State owned enterprise Transfer of tower and equipment Cooperate with CAT to find win-win solution CAT Telecom Public Company Limited ( CAT ) Mobile telecom concessions owner on 850/1800MHz with dtac Wholesale on 850MHz with TRUE 850/1800MHz spectrum auction Future infrastructure JVs Support NBTC to create fair environment Willing to rent infrastructure and do business with CAT State owned enterprise Access Charge Strong legal case TOT Public Company Limited ( TOT ) Owner of mobile telecom infrastructure from concession with AIS Wholesale on 2.1GHz network with AIS Future infrastructure sharing 2.3GHz spectrum deal Willing to rent infrastructure and do business with TOT To secure spectrum before auction in

19 NETWORK UPDATE Prathet Tankuranun Chief Technology Officer, dtac

20 2014 EOY coverage 2G 3G 4G 1800MHz : 10,830 sites 850MHz: 5,912 sites 2100MHz: 11,619 sites 2100MHz: 1,056 sites 1800MHz: - sites 20

21 2015: 3G coverage expansion, First 4G on 1800MHz 2G 3G 4G 1800MHz : 10,846 sites 850MHz: 11,565 sites 2100MHz: 12,754 sites 2100MHz: 4,151 sites 1800MHz: 2,191 sites 21

22 Q316: 4G coverage expansion, Fastest 4G on 20MHz carrier 2G 3G 4G 1800MHz : 10,839 sites 850MHz: 12,923 sites 2100MHz: 13,852 sites 2100MHz: 12,783 sites 1800MHz: 6,381 sites 22

23 Significant network improvement in recent years No. of base stations (in thousand) 4G coverage in every district 20MHz contiguous bandwidth on 4G-1800MHz Network densification for capacity and coverage Network perception has improved 4G 3G Overall network quality Indoor signal is good Voice : Easy to Make Call Voice : no drop call Voice : Quality is good Internet is easy to connect Internet signal is stable Internet speed is fast enough to use Q215 Q315 Q415 Q116 Q216 Q316 Network Perception current previous Source: Third-party market research 23

24 Network quality has improved Weekly 3G drop call rate Data traffic 3G-850 3G G G

25 FINANCIAL PERFORMANCE Sverre Pedersen Chief Financial Officer, dtac

26 Market snapshot 90 million subs 1 Subscriber approx. 130% SIM penetration rate dtac: 24.8 million subs % market share THB billion 2 Service revenue approx. 2% of GDP dtac: THB65.3 billion % market share 2 AIS dtac TMH others 26 1/ As of Q3-16 2/ Last Twelve Months ending Sep-16

27 Revenue growth has been driven by data service 24.3% 30.8% 39.3% 46.3% 53.6% 68.4% 62.1% 54.8% 46.7% 39.7% FY12 FY13 FY14 FY15 9M16 FY12 FY13 FY14 FY15 9M16 Industry data revenue as % of service revenue Industry voice revenue as % of service revenue 43.1% 35.7% 28.9% 21.8% 24.0% 5.7% -2.7% -10.6% -12.1% -12.3% FY12 FY13 FY14 FY15 9M16 FY12 FY13 FY14 FY15 9M16 Industry data revenue growth Industry voice revenue growth 27

28 dtac s data revenue growth has accelerated dtac vs. DTN subscribers service revenues ex. IC data revenue million subs THB billion QoQ YoY % of service revenues ex. IC +1.0% -1.2% THB billion * 46.3% 47.5% 47.5% 50.0% 54.2% 57.7% Q215 Q315 Q415 Q116 Q216 Q316 dtac DTN Q215 Q315 Q415 Q116 Q216 Q316 voice data others Q215 Q315 Q415 Q116 Q216 Q316 94% of sub base registered under DTN postpaid net adds remains strong YoY decline has slowed down data revenue mainly driven by mobile Internet 28 * one-time accounting adjustment on prepaid revenues of THB164 mln.

29 Costs are well under control THB billion cost of services * QoQ Q215 Q315 Q415 Q116 Q216 Q316 THB billion 6.7 regulatory network opex others YoY +1.2% -9.2% EBITDA (before other item) QoQ 6.6 YoY +9.4% +2.1% 7.2 THB billion SG&A expenses Q215 Q315 Q415 Q116 Q216 Q316 S&M bad debt gen admin * QoQ YoY -6.9% -2.1% EBITDA margin EBITDA margin EBITDA margin ex handset 41.3% 41.8% 41.9% 42.9% 44.7% 37.8% 35.9% 33.8% 33.4% 37.0% 30.7% 29.0% Cost of services and SG&A expenses are on declining trend Ongoing programs to improve operational efficiency EBITDA margin has improved Q215 Q315 Q415 Q116 Q216 Q316 Q215 Q315 Q415 Q116 Q216 Q * excluding depreciation and amortization, and IC

30 Strong financial position QoQ rise was mainly driven by higher EBITDA, partly offset by higher D&A and income tax YoY decline was mainly driven by higher D&A operating cash flow declined due to higher investment but remained solid financial ratios stabilized * excluding other component of shareholders equity. 30

31 2016 outlook slight decline from previous year at least same level as previous year same level as previous year Service revenue ex. IC growth EBITDA CAPEX 31

32 MARKETING UPDATE Sitthichoke Nopchinabutr Chief Marketing Officer, dtac

33 Thais spends 4 hours a day on smartphone on average LINE the most popular app Top 5 App by Usage per Day (Minutes per Day) Avg. Minutes per Day on Smartphone Line Facebook Google Chrome Youtube FB Messenger Q1'16 Q2'16 33 Source: Nielsen Mobile Insights- Thailand; n=705, Apr-Jun 16

34 Industry revenue growth has accelerated 12.7% 7.1% 5.1% 3.2% 1.3% FY12 FY13 FY14 FY15 9M16 Mainly driven by 4G Network expansion Sub base Device penetration Data usage Postpaid segment 34

35 Consistently strong development in 4G service 4G subs (in million) million 4G subscribers Q115 Q215 Q315 Q415 Q116 Q216 Q316 29% penetration of 4G-enabled devices driven in large part by handset campaigns 4G data usage (GB/sub/month) 4.1x 4.1x data usage increase continued expansion of 4G network driven by video and music streaming services Q115 Q215 Q315 Q415 Q116 Q216 Q316 35

36 Double digit growth in postpaid +13.7% +17.1% Q315Q415Q116Q216Q316 postpaid revenues Q315 Q415 Q116 Q216 Q316 postpaid sub base 36

37 Prepaid development challenged by handset subsidies -9.6% -3.5% Q315Q415Q116Q216Q316 Q315 Q415 Q116 Q216 Q316 prepaid revenues prepaid sub base 37

38 Prepaid in focus On-ground troops & Trade Promotion Top-up & SIM promotions Target Student & Traditionalist Student Traditionalist Gross Adds Revenue stability Reward Activation for Mass Only operator to bring reward to Mass nationwide Churn reduction 38

39 Lower level of prepaid subsidies 57.1% % smartphone handset revenue THB billion QoQ YoY -16.4% +2.5% 67.5% 65.0% 63.2% 60.7% 60.9% handset subsidies THB million QoQ YoY +29.3% -73.4% Q215 Q315 Q415 Q116 Q216 Q316 Q215 Q315 Q415 Q116 Q216 Q Q215 Q315 Q415 Q116 Q216 Q316 handset campaigns continued to drive smartphone penetration despite lower level QoQ, handset subsidies remained crucial for competing in the market 39

40 Distribution channel expansion Postpaid Expand sales and service touch points in order to attract and acquire more customers. Provide exceptional channel convenience and experience for dtac customers Refill Channel Expansion Prepaid SIM Channel Expansion Expand shops in terms of both coverage and density Strengthening retailer channel to focus on SIM card distribution Dedicated SIM Sales 40

41 Create position on network and value Network Positioning Value Offerings the widest 4G, the smoothest experience Differentiated offers Make It Easy & Worry Free themes 41

42 Emphasis on digital innovation Contextual offers pushed via digital channels 42

43 TAPAD PILOT Michael Beck-Hansen Head of Customer Value Management, dtac

44 Telecom & TAPAD insight Telecom Insight & Contextual Real time Contextual Capabilities DNA Topup & Payment Unifying capabilities TAPAD (3 rd Party) Insight Call Detail Records CRM Unification of Data & Contextual Capabilities 1 Telecom Use case 2 Acquisition Upsell to existing base Win back & Spin back Move traffic to own channel Digital add Revenue 2015 US, USD *60 Bil Digital Marketing Use case Revenue Share **63% *Source emarketer.com **

45 The goal is to make Dtac the world s most sophisticated telco in digital marketing 1 Content offer 2 Device offer 3 Super easy digital porting easy porting process 45

46 Three programs Multiple campaigns in each use case will address the different customer states Use Case Stage in lifecycle Acquisition Prospect Up-sell existing subs Healthy Win-back & Spin-back Dormant/Churn 46

47 Acquisition use case Targeted mobile advertising for attractive segments Three main sources determine high ARPU subscribers Native ads on Kaidee Targeting subs with device and tariff offer Device Data Usage Interest Identifying the high-end subscribers 47

48 48 Demo

49 Conclusion Thailand market Key focus areas #2 244 midsingle digit operator in a competitive 3-player market THB billion in mobile revenue (Last Twelve Months ending 30 Sep 16) market growth driven by data and postpaid Postpaid growth and prepaid turn around Network and spectrum investments to secure data position Operational Efficiency through digitization of the core Digital products for differentiation and upsell 49

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51 Disclaimer Certain forward looking statements may be made in the course of the presentation. These forward-looking statements generally can be identified by use of statements that include words or phrases such as dtac or its management believes, expects, anticipates, intends, plans, foresees, or other words or phrases of similar import. Similarly, statements that describe dtac s objectives, plans or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forwardlooking statement. The forward-looking statements contained in the slides are not and should not be constructed as representations of the future performance of dtac and that such statements are an expression of the Company s reviews based on its current view and certain assumptions including, but not limited to, prevailing economic and market conditions and currently available information. Investor Relations E: ir@dtac.co.th T: